VANCOUVER (miningweekly.com) – The implementation by Excellon Resources of Phases 2 and 3 of the Platosa optimisation programme and development into higher-grade areas of the Mexican mine has resulted in significant cost reductions, and pushed the company back to an adjusted second-quarter profit.

During the period, the Toronto-headquartered miner recorded a net loss of $4.4-million, or $0.07 a share, compared with a net loss of $1.8-million in the comparable period of 2015. Adjusted to remove special items, the company's net income totalled $852 000, or $0.01 a share, beating Bay Street analyst estimates of posting a loss of $0.01 a share.

Output from the Platosa mine, known as Mexico’s highest-grade silver mining operation, totalled 227 826 oz of silver, reflecting the combined effect of 13% grade and 6% recovery improvements when compared with the operation’s performance during the second quarter of 2015.

Similarly, lead output of 1.3-million pounds reflected a 16% grade and 10% recovery improvements over the comparable year-earlier period. Zinc output of 1.6-million pounds was 10% lower year-over-year, owing to lower zinc grades mined. In total, Excellon produced 368 568 silver equivalent ounces in the quarter, compared with 341 975 silver equivalent ounces in the second quarter of 2015.

Excellon reported higher net revenues of $5.4-million, compared with $4-million a year earlier, mainly the result of accessing the Rodilla Manto which improved production to 334 549 silver equivalent ounces payable in the quarter, compared with 329 200 silver equivalent ounces payable in the first quarter of the year.

The company realised significant cost reductions at its mining operations in the second quarter, with the cost of sales falling 16% or by $800 000 to $4-million, compared with $4.8-million a year earlier. Production costs improved by 14% and decreased to $3.4-million during the quarter. The significant cost reductions were attributable to continued improved maintenance practices on pumps and mobile equipment. The Company expected costs to be further reduced upon completion of the ongoing optimisation plan, it advised.

The cash cost per silver ounce payable of $9.81/oz in in the period improved by 42%, compared with $16.96/oz a year earlier. All-in sustaining costs (AISC) of $19.27/oz reflected a 21% improvement over AISC of $24.53 in the second quarter last year. Total sustaining cost of $2.1-million in was 60% higher than in the same period a year earlier, mainly owing to increased sustaining capital expenditure associated with the Platosa optimisation plan.

Excluding this one-time capital expenditure, adjusted AISC during the period were $15.27, a considerable improvement from previous quarters and demonstrating progress towards materially reduced costs per ounce under dry mining conditions, Excellon advised.

Excellon’s TSX-quoted stock rose as much as 7% on Monday to C$1.52 apiece after the news release.